Meta, the parent company of Facebook and Instagram, is laying off 11,000 employees — equivalent to 13 per cent of its workforce — amid declining revenue, its founder and chief executive said.
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” Mark Zuckerberg said in a statement on Wednesday.
“I’ve decided to reduce the size of our team … we are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through the first quarter.”
Mr Zuckerberg apologised and took the blame for the company's decline in revenue after disappointing earnings in October.
“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that,” he said.
The social media company's revenue dropped nearly 4 per cent annually to about $27.7 billion in the third quarter, compared with analysts’ estimates of $27.4bn, according to Refinitiv, down nearly 3.8 per cent on a quarterly basis.
Meta had more than 87,000 employees at the end of September. Its share price is down 72 per cent since the start of the year.
“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those affected,” Mr Zuckerberg said.
Last month, the company reported a 52 per cent annual drop in third-quarter net profit as it recorded its second consecutive quarterly revenue decline, underpinned by a decrease in average price per advertisement.
Net profit for the three-month period to the end of September fell to about $4.4bn, nearly $4.8bn less than in the same period a year earlier. It was down about 34 per cent from the second quarter of this year.
This is the second consecutive quarter that the California-based technology conglomerate has reported a double-digit drop in net profit.
“In this new environment, we need to become more capital efficient,” Mr Zuckerberg said.
“We’ve shifted more of our resources on to a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse. We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency.”
Employees in the US will receive 16 weeks of base pay plus two additional weeks for every year of service, with no cap, as part of their severance package.
Staff affected by the layoffs will receive their November 15, 2022 restricted stock units, a form of stock-based employee compensation, and employees will be compensated for all remaining personal time off.
The company will provide health insurance coverage for laid off staff and their families for six months.
Employees laid off outside the US will have similar severance packages, in line with the local employment laws of the countries in which they work.
Mr Zuckerberg said business teams in the company will be restructured “more substantially” and that Meta has reined in spending before the announced layoffs.
The company is reducing its real estate footprint and pivoting towards desk sharing for people who already spend most of their time outside the office and it will roll out more cost-cutting changes in the coming months.
Meta will extend a hiring freeze through its fiscal first quarter with a small number of exceptions, Mr Zuckerberg said.
“I’m going to watch our business performance, operational efficiency, and other macroeconomic factors to determine whether and how much we should resume hiring at that point,” he said.
“This will give us the ability to control our cost structure in the event of a continued economic downturn. It will also put us on a path to achieve a more efficient cost structure than we outlined to investors recently.”
Mr Zuckerberg said he is currently reviewing the company's infrastructure spending as part of wider plans for Meta to be more efficient with its capacity.
"We’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently across both Family of Apps and Reality Labs," he said.
